Question

Discuss what is the tax rates, grossing-up rules and Chargeable Lifetime Transfer

Taxation

Answer 1

Grossing up

A gross up is when you increase the gross amount of a payment to account for the taxes you must withhold from the payment. Let’s say you promise an employee a specific pay amount. You will issue gross wages for more than the promised amount. After you withhold taxes from the payment, the net amount should equal the amount you promised.The gross up basically reimburses the worker for the taxes.

Chargeable Lifetime Transfer Taxation

People like to transfer some of their assets whilst they are alive – these are known as ‘lifetime transfers’. Whilst we are all free to do this whenever we want, it is important to be aware of the potential implications of such gifts with regard to Inheritance Tax. The two main types are potentially exempt transfers (PETs) and chargeable lifetime transfers (CLTs).